Jeff Cooper Case Study: Breaking Down a Big 1-Day Gain in HTHT

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On October 25, China Lodging Group (HTHT) put in a Large Range Key Reversal Day following a bit uptrend:

After drifting lower, on 11/15, my proprietary Lizard Buy signal was issued:

The Lizard Buy ignited a 1-day rally that fizzled out, leaving another of my proprietary signals: The Holy Grail Sell:

On November 17, that November 15 bottoming tail broke, giving Daily Market Report readers an opportunity to get short.

Let's zoom in on the November 28-29 bars so you can see how the trade worked out:

HTHT put it an opening 30-minute low at $116.39.

In certain situations, breaks below the opening 30-minute range (which I call an Opening Range Breakdown) provide attractive shorting opportunities.

We got short at $116.29:

On November 29, HTHT gapped lower premarket, and I sent an alert to cover the entire position at the open:

As you can see in the chart, we covered on the open at $111.58 for a $4.71 gain.

This was a nice one-day profit for our readers.

There are some important lessons to be had here:

1) When a stock is downtrending, failed Buy setups can indicate a bigger move lower
2) Use multiple time frame analysis to increase the accuracy of your trades
3) When you're short a stock and it gaps down big (like HTHT did in this example), don't be afraid to take the money fast. We could have squeezed out a bigger profit by holding on longer, but after a big one-day gain like we had, there's no need to get greedy.

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